Solutions to the Philippine Rice Problem II

The headlines are now talking about NFA's failure to bid out the Philippine's rice requirements. A few days ago, the suggestions in this site include:

Free for all rice importation and removal of tariffs, VAT, etc.. At this point, the government charges rice imports a customs duty (tariff) of 40~50% and a value added tax of 12%. Because of such barriers being imposed by the government, the cost of imported rice is very high. A removal of tariff, tax and other restriction restrictions (quota) on rice importation will encourage more businessmen to import the commodity. With more imported rice coming in, hoarders will be forced to sell their stocks thus creating a free flow of the commodity in the local market. Such move will also spare the government from having to import a lot on its own. It will therefore save the taxpayers approximately P22.Billion ($549 M) for every one million metric tons that it is does not import.

and,

If ever the Philippine government needs to import rice, it should avoid the speculator infested futures market. Instead, it should go for government to government transactions and go further by using countertrade. For instance, mangoes, bananas and finished articles of clothing may be sent as payment in exchange for rice.

Browsing the web pages, I found that this is what other countries have effectively done:

– Wade’s government responded to protest marches by securing a deal with India that ensures Senegal’s needs of 600,000 tons of rice a year are met for the next six years.

– In Burkina Faso, the government eliminated duties and taxes on rice, salt, milk and all products used to prepare food for children.

It is probably wise for the Philippines to study what other countries are doing and determine its applicability to the local economy.

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